After losing $327 million in the third quarter of this year, and having to place next to 5,700 workers on extended leave in Italy due to a prominent decrease in Western Europe’s car sales, and therefore a substantial loss of money on assembly plants in the carmakers home countries; it seems only logical for Fiat to focus on different sources of manufacturing in Eastern Europe to lower their average costs.

Some History: Serbia was commonly referred to as “hunger valley” due to the collapse of old Yugoslavia, followed by sanctions and war.  However, there was still hope for one aspect of this regions economy and that was its industrial legacy in Zastava, a small settlement in what was once a section of Yugoslavia called Slovenia.  With close ties to FIAT, Zastavas assets were transferred to form a new company known as Fiat Automobili Srbija (Fas).

Fiat has invested €1.2 billion in to their new plant in Kragujevac, as well as currently employing 3,800 workers.  Wages were increased by 13%, and the Serbian government is paying Fiat €10,000 for each new employee it takes on, as they have recently been criticized for economic growth without new job opportunities for its citizens.

Fiat is now producing at 1/5 of their original costs, and creating shared value between their company and the Serbian population as it is creating more jobs for the citizens.

http://en.wikipedia.org/wiki/Yugoslavia

http://www.economist.com/news/business/21588926-fiat-goes-east-lower-costs-balkan-legacy?zid=293&ah=e50f636873b42369614615ba3c16df4a